Treatment of exempt-interest dividends by shareholders
An exempt-interest dividend shall be treated by the shareholders for all purposes of this subtitle as an item of interest excludable from gross income under section 103(a). Such purposes include but are not limited to—
(i)#
the determination of gross income and taxable income,
(ii)#
the determination of distributable net income under subchapter J,
(iii)#
the allowance of, or calculation of the amount of, any credit or deduction, and
(iv)#
the determination of the basis in the hands of any shareholder of any share of stock of the company.